Cooperation with a recruitment agency - where do the costs come from

Cooperation With a Recruitment Agency – Where Do the Costs Come From?

When looking for support in hiring new employees, it’s common to begin cooperation with a recruitment agency. However, the conversations prior to starting the actual recruitment process often involve thorough explanations about the agency’s fees. The discussions over the contract can be nerve-wracking and timely, so in this article, we’re describing what makes up those costs. 

We hope that you’ll find our reasoning helpful in your research on working with a recruitment agency! 🙂

cooperation with a recruitment agency

Time

The recruitment process can be very time-consuming, so the agencies screen the CVs and talk with the candidates who will make it through for the client’s review. Thanks to that the Hiring Manager doesn’t have to spend time attracting candidates and going through tons of profiles and applications to find a few qualified ones. 

From our experience, in order to send 2-5 good CVs to the client, the recruiter often has to contact over 500 people. In the IT industry, it’s especially challenging, as the demand for such employees greatly exceeds their availability on the job market. Did you know that as many as 53% of European companies report difficulties in recruiting IT professionals?

Recruitment agencies can provide you with carefully assessed candidates as they have a large talent pool with already pre-screened and pre-referenced potential employees; thus, they can sometimes speed up the process even more.

In this case, the proverb: “Time is money” fits perfectly.

Know-how

We all know that in order to succeed in life, we should constantly develop our skills. The same rule applies to one’s professional career. Recruiters need to be highly specialized and have in-depth knowledge of particular employment sectors. In the IT industry, recruitment agencies have a very important role, as their consultants need to carefully scan potential candidates based on the sought-after skills. This wouldn’t be possible without having expertise in this specific area.

Their know-how, of course, doesn’t come out of the blue – good recruitment agencies invest in their employees by providing access to courses (e.g. on effective sourcing or the basics of programming languages) and possibilities to gain certificates.

This constant professional development of the team members means expenditure on the side of the recruitment agency’s owner.

Individual approach

A reputable recruitment agency needs to have an individual approach – both to the candidates and the clients. 

Preparing for the meeting with a candidate is an essential part of a good recruitment process. By reading the CVs and carefully looking at the LinkedIn profiles of the candidates before having the conversation with the candidate, the recruiters show their interest and respect. The information that the recruiter has from the Hiring Manager is crucial for a meaningful conversation to happen. That is why the employees of the agency, who work on a specific project, must know what is the profile of the sought-after candidate. 

Being a real partner in the conversation and showing the knowledge in the domain, while working on several other projects at the same time, can be quite a challenge. However, this type of concentration always pays off.  For example, it helps the IT specialist to open up and encourages them to share more about their previous work experience. With that type of useful information, the Hiring Manager can get a better understanding of a candidate. In return, this increases the chances of finding “the right fit” and ending a recruitment process with success 🙂

Advanced recruitment tools

As you might already know, the recruitment process, even when done on one’s own, is costly. Have you ever tried to post a job offer and then run an advertisement with it/pin it to the top of the page? If your answer is no, then it’s good to have a look at the basic prices of popular job posting sites – you might be quite surprised (and we don’t mean it in a necessarily positive way 😉 ).

Additionally, as tech has advanced, so has the number of tools in a recruiter’s toolbox. Companies moving with the times invest in new recruitment tools that help in automating and streamlining the process of hiring.

If the recruitment agency works with an advanced Application Tracking Systems (ATS) or has LinkedIn Premium accounts, that is already a very good sign of the professional approach. However, these amenities are also not available for free. To give an example, LinkedIn Recruiter cost starts at $8,999 for a year-long subscription and a monthly plan costs $825 per month. 

Company maintenance

It goes without saying that a recruitment agency is a real business. As it is with running any other company, the owner has to cover the costs of:

  • Salaries of the team members
  • Healthcare and other benefits
  • Payroll taxes
  • Administrative costs such as office maintenance

If you’d like to know more about the commonly known IT recruitment approaches, we encourage you to read the article: “RPO, Recruitment Agency, Freelancer”.

What are the most popular recruitment agency fee structures?

Fees of a recruitment agency vary depending on the industry and nature of the potential employees – their salary, seniority, and skill level of the role often determine the amount. It also plays a role whether the vacancy is temporary or permanent. 

The 3 most popular models of working with a recruitment agency are:

  1. Success fee model – it’s the payment of 100% of the agency’s fee at the end of the recruitment process. This is a model that doesn’t require any prepayment to the agency.
  2. Mixed model (semi retainer) – prepayment usually equals around 10-40% of the project value and the remaining amount has to be paid at the end of the project.
  3. Retainer model – it’s usually divided into 3 (but you can also find solutions with 4) installments. The remuneration is paid to the agency after completing the stages in the process such as: starting the recruitment process, presenting the candidates and closing the process.

We also recommend looking at the services of a recruitment agency and based on the service that interests you the most, we encourage doing further research.


If after reading this article you’d like to start a cooperation with a reliable recruitment agency – contact us. We’ll be happy to help you find the best qualified IT specialists tailored to your needs.